There are two things most financially-conscience people aspire to: retiring rich or retiring early. But which is better?
Many people who haven't retired believe early retirement sounds fantastic, especially since so many are disengaged from work. On the other hand, who wouldn’t want to retire rich? However, to retire rich, you typically have to work for decades or get really lucky with an investment or career.
As someone who pseudo retired early at 34 in 2012, I can confidently say that retiring early is far better than retiring rich—assuming retiring rich means retiring much later in life.
I say this because, after more than 13 years on my retirement journey, I now have significantly more money than when I first retired. Comparing what it was like to retire at 34 with the money I had to the money I’ve accumulated by 47, I can say without hesitation: I wouldn’t trade the time and freedom I’ve had for the extra wealth. Not even close.
Suggestion: Retire well with real estate. Fundrise manages over $3 billion in private real estate investments, mainly in the Sunbelt region where valuations are lower and yields tend to be higher. With the Fed embarking on a multi-year interest rate cut cycle, there should be increased demand in real estate in the coming years.
How To Determine Whether To Retire Early Or Retire Rich (And Older)
Let’s break down some numbers to illustrate why retiring early is better than retiring rich and older.
After 17 years of working, saving, and investing, let’s say you accumulate a $1 million net worth—$400,000 in home equity and $600,000 in the S&P 500. You're 40 years old. Living in a big coastal city, you’d be considered “Coast FIRE” since a 4% withdrawal rate provides a modest lifestyle.
Now assume your net worth grows at 6% annually for the next 20 years without you regularly working and after all expenses. By 60, your net worth would reach $3.2 million. With a 4% withdrawal rate, you could spend $128,000 a year before taxes, though inflation would cut that purchasing power in half.
Alternatively, if you kept working and saved $20,000+ annually to help boost your net worth growth rate to 10% per year, your net worth would grow to $6.7 million by 60. You’d then be able to withdraw $268,000 a year.
The difference in net worth between working for another 20 years versus not working is $3.5 million ($6.7 million – $3.2 million). Now ask yourself: is it worth spending 40,000 more hours working for an extra $3.5 million if you have all your basic needs met?
The Extra Money To Retire Rich Isn’t Worth It
Given that the majority of American workers don't enjoy their jobs, the answer is clear: spending ~40,000 hours doing something you don’t love is not worth it. Most jobs get boring after 10 years, and at age 40, you’ve already put in 17 years after college.
Unless you’re deeply passionate about your work—like saving lives—it’s far more rational to retire early with less money than to retire much later with more. If you sacrifice spending years doing something that doesn't provide tremendous value, I fear you will look back upon your life with deep regret.
When you’re gone, no one will care that you spent 40 years getting teenagers addicted to a social media platform just to drive ad revenue.
In 30 years, no one will remember you for creating a sugary drink that fueled a diabetes crisis.
In 20 years, no one will care that you helped a money manager grow their wealth so they could buy a $50 million mansion in Aspen.
And in 10 years, citizens will also forget about all the government grift that occurred under your leadership.
The only people who will miss you when you are gone are your loved ones and the people you directly helped.
The Amount You Retire Early With Matters
Of course, retiring early with too little can be risky. Let's say you semi retire with $500,000 and spend your 40+ hours a week hustling as an online entrepreneur, you're not truly retired—you’ve just changed careers.
To make early retirement truly better than retiring rich and older, you must have enough passive income to cover your living expenses. Otherwise, you’ll fool yourself into thinking you’re retired while:
- Relying on your partner to keep working at a job she doesn't like
- Always stressing about finding new ways to make money
- Sacrificing your soul, peace, and happiness for financial gain
If your passive income covers your basic needs, you’ll quickly realize that early retirement is superior to working longer just for more money. The value of freedom is priceless. Sooner or later, you will find more meaningful things to do with your free time.
The Age At Which You Retire Rich Matters Too
Of course, the longer it takes you to retire rich, the more you'll prefer to retire early. What’s the point of retiring rich at 75 when you have such limited time and power health to enjoy your wealth?
For the argument to favor retiring early, I believe the gap between retiring early and retiring rich needs to be at least 10 years.
For example, retiring early at 35 versus retiring rich at 45 is a toss-up. However, if it takes 11 or more years to retire rich, each additional year strengthens the case for retiring early. Conversely, if it only takes five more years of grinding away to retire rich, then you might as well stick it out.
Once the gap reaches 20 years, it’s almost a certainty that retiring early is the better choice over retiring rich. We only have about 80 years to live, and 20 years is 25% of the average lifespan. No one should sacrifice that much time just to accumulate more money than they need!
The Definition Of Rich Is Subjective
The final factor in deciding whether it's better to retire early or retire rich is defining what “rich” really means. The concept of retiring rich is subjective. If you earn a top 1% income of $650,000, you might be considered rich, assuming it's sustainable and you’re not spending it all. If you have a top 1% net worth of over $13 million, you're undoubtedly rich.
However, being rich also means having your health, strong friendships, and enough investment income to cover your basic living expenses. Poor health and no friends? It doesn't matter how much money you have as you won't feel rich. So, when determining if it’s better to retire rich, you need to evaluate whether the hours spent working to reach that “rich retirement number” are truly worth it.
Is spending over 10 years to achieve a top 1% net worth or Fat FIRE worth it? That depends on how much you enjoy—or loathe—your job and the physical and mental toll it takes on you. Every year, we see NFL players in their prime walk away from millions because of the health risks of playing football.
No Amount Of Money After 40 Is Worth It
Personally, no amount of money is worth sacrificing more than a decade of your life for, especially once you’re past middle age. Time is far too precious to waste on something you don’t enjoy. Sure, having $10 billion at 57 would be great, but it's not worth it to me if I've got to sacrifice too much time away from my family.
Again, we’re comparing the option of retiring early versus retiring with an enormous amount of money. This isn't a discussion about going from poverty to incredible wealth, which is worth grinding for decades. If you can retire early, by definition, you have a comfortable enough amount of wealth to be free.
The Key Is to Adapt in Retirement to Changing Needs
I consider myself an early retirement failure because I miscalculated how much money I truly wanted in early retirement after five years. I also didn’t accurately forecast how much I needed due to the growth of my household. From 2021-2023, inflation also increased much higher than anticipated.
In 2012, I retired with about $80,000 a year in passive income, which I thought would be enough for me and my wife to live comfortably for the rest of our lives. We had planned to relocate to Honolulu after she negotiated her severance package in 2015, aiming to lower expenses and improve our lifestyle.
Then Our Plans Changed
However, after she retired, we wanted to travel—and travel we did, visiting 10 countries a year for two years. Then we wanted to have children, and after some challenges, we had our son in 2017. Since we were more familiar with San Francisco than the demands of parenthood, we decided to stay. Seven years later, with another child and rising costs of everything, we’re still here in the Bay.
A big part of living a successful early retirement lifestyle is recognizing your financial miscalculations, accepting them, and then taking action to improve your situation. You are never fully stuck in retirement. For me, adapting meant shifting my asset allocation to generate more income when needed and creating supplemental income through consulting.
Since I love to write, generating additional income through books and Financial Samurai has been a bonus. I would write regardless of whether I made any money from it, as I did in the early years of this site.
Cherish Time More Than Money Please
Now that I’m in my late 40s and still living in San Francisco, I know plenty of ultra-wealthy people with net worths exceeding $20 million—some even have $100 million, $500 million, or $1 billion. But despite their wealth, they carry the same worries, stresses, and health issues as those with far less.
Some are fortunate and love what they do, but many continue grinding, clinging to their status in society while hoping becoming even wealthier than their peers. Yet, 10 years later, I'm not sure they will feel more fulfilled. It’s hard to quit the money and status even if you have enough of them.
Aside from the ability to fly private or live in $10+ million homes, their lives aren’t much better than those who retired early with much less. Sure, the rich retirees can easily donate $100,000 to their children’s private schools and enjoy the adoration of the headmaster and staff, but beyond that, there isn’t much difference.
Choosing To Retire Early Is The Rational Choice
So if you’re deciding between retiring early or retiring rich, I say retire early. By retiring early, you prioritize your most valuable asset: time.
If you prioritize time, in the event of an early death, you will have fewer regrets. If you live and later decide you need or want more money, you can always allocate some of your freedom to earn.
Of course, don't just quit your job to retire early either. Instead, try and negotiate a severance package so you can enter your new phase of life with a nice financial cushion. If you plan on retiring early anyway, there's no downside in trying to negotiate a severance. Both my wife and I did, which gave us tremendous confidence to stay free.
There’s always another dollar to make, but never another second to create. Once your basic needs are met, you’ll regret sacrificing time far more than money.
Of course, the ideal scenario is to retire both rich and early. But even then, without a life of purpose, all the time and money in the world can quickly feel meaningless.
Would you rather retire early or retire rich and why? If most people don't like their jobs, why do they continue to grind after accumulating a large enough income to live happily ever after?
Diversify Your Retirement Investments
Stocks and bonds are classic staples for retirement investing. However, I also suggest diversifying into real estate—an investment that combines the income stability of bonds with greater upside potential. Real estate and a severance package were what enabled me to retire early in 2012 at age 34 and never return to work.
Consider Fundrise, a platform that allows you to 100% passively invest in residential and industrial real estate. With over $3 billion in private real estate assets under management, Fundrise focuses on properties in the Sunbelt region, where valuations are lower, and yields tend to be higher. As the Federal Reserve embarks on a multi-year interest rate cut cycle, real estate demand is poised to grow in the coming years.
I’ve personally invested over $270,000 with Fundrise, and they’ve been a trusted partner and long-time sponsor of Financial Samurai. With a $10 investment minimum, diversifying your portfolio has never been easier.
To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. Financial Samurai is among the largest independently-owned personal finance websites, established in 2009.
I retired at 51 after a 26 years in IT. I was not able to apply myself as I used to during early years as a software engineer. Unfortunately, my attempts to rise up in a corp did not succeed because I am sure I lacked something. So, long story short, I got caught in a catch 22. I could not continue doing low level programming/tech jobs because 20+ year olds were quicker, efficient and better. Also I was suffering from back pain and stress. I could not go up because it did not work out and I messed up in at least one opportunity. Those opportunities do not come so often. So when you get caught in a situation like this, it takes a toll at a psychological level. One certainly feels a certain amount of despair after all this. Exactly, that’s what hastened my retirement. I have a corpus of $5M. Not something to brag about, but at least money problem is solved. Elder son will graduate from college in about 8 months. Younger one will start his Freshman in college in about 3 years.
There are times I feel I called the shot to retire a little too early. But it has certainly helped me gain my confidence in myself back and remove negative opinions. It’s been one year and I’ve realized I am lucky to amass this wealth and lead a comfortable life. When I wake up late without worrying about meetings, I feel blessed. I do what I want to do and when I want to do, without anybody asking for anything. One thing I’ve come to realize is that there is no free lunch. When you accept salary/money it always comes with compulsions and obligations that need fulfilled. I am enjoying this freedom for one year or so and actually now I don’t want to work. The salary money does not seem attractive enough for the pain.
So the point of narrating this whole story about myself is that I indeed have noticed this change in myself and feeling that my time is more valuable to me than the money it fetches.
What is it that you guys do that you want to retire so early from it? Is it that horrible? Cant You just try to experience happinness in the moment? Things will never be perfect as You want them, but they can be perfect in and on itselves.
I retired from a job in investment banking that required working 60+ hours a week (not that bad compared to corporate finance), and constant pressure to be in the top 3 with clients every month and quarter. Lots of travel and demand of your time.
Jc i think retiring is a mindset and a financial peace of mind. I dream of retiring early but it does not mean stop working. Means being able to afford to live with your savings and still be active, like Sam for example
Hi,
So good article and it was really made for me. I have plan to “retire” soon age of 34. I sold my part of small company and I have savings but my investments suck right now. Im European and I have been too scary to put my money work too long. I need only 4-5% profit to be free from work in long run. Of course more is better. I think world index and sp500 is almost only place where I have braveness to put big money. I can even put lump sum but I am very scared of P/E in SP500. What is your suggest to my situation? Put money in index in few parts and just wait?? I want simplicity.
You could do a world international index (world ex US). You would escape the valuation issue and also keep it very simple and low cost.
It’s sad to see someone who “made it” but does not get a chance to enjoy retirement due to ill health or death.
My parents’ had a neighbour who worked overseas for decades. The couple planned their retirement by buying a house in a nice low-cost-of-living area next to my parents. He planned to work a few more years before retiring fully. Then he got cancer and died within a few months. She got all the money but didn’t have a chance to enjoy the retirement as a couple.
Yep that has happened to a lot of my friends that retired with big pensions. They died suddenly and without warning and the pension money is all gone unless they signed up for the spousal benefit and a lot of retirees don’t do that. What a shame, we never know how much time we are going to get. Early retirement solves a lot of things and if people would invest a little better the entire country could retire after 20 years of work and leave the jobs for the younger generations.
This article hit home for me, I quit my job in the summer of 2020 because of Covid and when I tried to go back to the profession I left I couldn’t get rehired, so early retirement for me whether I wanted it or not. Now 4 years later I couldn’t be happier with my decision to quit work. I have time to do what I want and I have time to learn about investments and managing money.
I have a lot of money to invest and the money grows very well. My spending is very low and I have decades of income saved that keeps growing in my regular brokerage and retirement accounts. My net worth has doubled and I get subsidized health insurance because my taxable income is very low each year now. I have been encouraging other people to retire early especially since a few of my former co-workers and people younger than me have died already and a few of my retired friends died a couple of years after earning huge pensions. Pensions are meaningless if you die.
One of my co-workers bought a big ranch and had tons of money, he owned it for about a year and then he died of a heart attack, another woman I worked with was walking her dog and fell down, she died from her injuries. People often work much longer than they need to and that is the wrong way to look at things. We don’t know how much time we actually have so people need to balance their lives to allow for time to do the things they love and worry less about stacking all that extra money. Sometimes work does not pay especially when over 40 like you say.
I have always enjoyed reading, learning new things and spending time with a small circle of friends and with early retirement I have time to do that all the time. I would encourage everyone to live the life they want now and definitely consider trading huge wealth for more time to do the things you love. Best decision I ever made and once you get a certain amount of money compound interest takes over and you are set for life. Very cool stuff!
Hi, Sam! Been an avid fan for probably a decade but don’t really comment much at all. This is a great article to illustrate the real tension that most of us feel. I am 52-years-old and have definitely hit the “wall” after almost 30 years of working in Fortune 100, Big 4 accounting, and tax consulting. One thing that is helping me is that I am now in the process of using retirement calculators to give me a sense of the financial realities of cutting back to a less stress, less pay or part-time job. In addition, having a financial advisor review my financials and give his opinion. Being a numbers based person, I am hoping these show I am good shape to move to such endeavors.
Awesome post, Sam. I’ve been in this quandary for past several years. I’m 53, net worth ~ $18mm, which includes $500k in 401k and $600k in cash. Primarily residence paid off. Most of investments are income-producing real estate. With my wife (who doesn’t work), we have 9 year old. Current 9-5 with gov’t pays $180k/year. Son’s 529 has $325k. The decision whether to leave my job is difficult because I really do like my job – I’m a prosecutor, and get to do great things for victims and charge the “bad guys,” and have quite a bit of autonomy. But, as with any job, even if you love it, it still takes time away from family and free time. I’m just concerned that retiring at 53 (which is still considered “early” but later than others here), I’ll get bored, and most of our friends will be continuing to work. Not to mention that if I stay until 57, I get lifetime medical. Not sure if should stay for that too.
Boredom can definitely be an issue after retiring early. So you have to retire to someday and do a trial before you leave.
Can you share how you were able to achieve a $18 million net worth with a $180,000 income? I think that would be fascinating for everyone to learn!
Most people I know call it quits after achieving a net worth equal to 20X average gross income.
Thx!
In addition to making around $300k/year in early 2000s while working for 5 years at nat’l law firm, which I socked away much, around 10 years ago, I got lucky and inherited a $4mm property in SoCal.
After selling that property, over past decade, I folded the proceeds into multiple assets (with current mix of 3 NNNs, several SFRs and duplexes in SoCal, 4 large syndicated deals around country, and two condos), which have grown in value to around $16mm net (have appx $2.5mm in 3-3.25% investment prop loans on them). Primary residence worth around $2mm. Other than my gov’t 401k and son’s 529, I don’t have much in stocks.
In my experience, which admittedly is limited, one good RE deal every couple years can really increase net worth.
I realize and am a bit concerned that my investment mix is overly concentrated in RE, but I’m hesitant to do stock market, because don’t really feel like I understand it or can control it enough. Past couple years, treasurydirect’s 5% has been where i’ve placed my cash.
I manage all this basically by myself, with my RE attorney’s assistance, so I think would have stuff to do in retirement. But while it’s interesting doing RE deals, it’s nothing like my 9-5 in terms of enjoyment/excitement. In fact, there is an argument that I lose money by continuing to work my 9-5 (bc probably should be spending more time looking at investments to maximize return).
Again, thanks for all your posts.
Thanks for sharing that you inherited $4 million of assets. Although obviously quite lucky, you did well investing the proceeds.
You help other readers understand, which is great because I think some people who are making Your similar income might be scratching their heads, figuring out how they can do the same, and likely never doing so.
Thanks again!
Respectfully, you have 18m net worth, do you really need to be concerned? Lol
Thanks for the post. I have been thinking about retiring early as well but then i get scared about health insurance cost and not having a steady income. I am 53, net worth 4,5M ( house value 1,2 mortgage 260k). I keep making calculations but i feel i need to be at 6M saved before retiring and i am a bit far from that target…
My family of four pay $2,500 a month for health insurance premiums to give you some real data for what to model.
If you can get your retirement income down to 400% of the Federal Poverty Level limit or lower, you’ll actually get healthcare subsidies too. See: https://www.financialsamurai.com/how-to-qualify-for-healthcare-subsidies-under-the-affordable-care-act-even-as-a-multi-millionaire/
What’s your annual expenses? I’d work until you at least pay off your $260,000 mortgage. Shouldn’t take longer than 3-5 years if you focus on it I’m guessing. It’s fun to work toward a specific goal.
I appreciate your response! The reason why i keep mortgage is because its a 15 years at 2%….i refinanced before the inflation period! I am able to save at least 100k after tax money a year (and max out 401k, funding permanent insurances and 529) however currently my monthly expenses are quite high as i enjoy traveling and unnecessary expenses (which of course i can cut back in future). Say my monthly expenses are now around 15-20 including mortgage and house taxes/insurance…i think i could retire comfortably at 60, 6ish years from now and count on 15k a month expenses. Thoughts?? Thanks much
Got it. Yes it should work. I hope you enjoy your job in the meantime. Bc I think you will have way more than enough.
I would not mind to stop working at all now, to be honest, i just cannot figure out if i can afford it…
Why not take us sabbatical for two or three months and see if you can?
I know a guy who is the cofounder and CEO of a small cap public company. His companies market cap is the SAME as it was 10 years ago!
What a waste of time. He doesn’t want to do something else because he still has hope he can turn around his company. And if he steps down, he becomes irrelevant because he’s an a-hole. Nobody really likes him, they just pretend to because he is the CEO.
It’s good he doesn’t quit for his own mental well-being.
Great post and very timely for me. I am 43y old corporate exec making $1M annually. However, due to taxation in my country my net salary is ”only” $500k. I own my ”rest of life house” and have no mortage. On top of that I have $3.5M investments (60/30/10 stock/bonds/realestate). I kind of like my job, but at the same time it is very demanding and I need to travel a lot, which means that I am away from my family too often. I have two young kiddos and wife who is at home with kids. I constantly think when would be the best time to quit and retire. My challenges are: 1. Ater quitting, i will never find this well-paying job. 2. Currently, I can accumulate wealth quickly. 3. I my line of work, there are no part-time roles. 4. With kids, there can be unexpected costs that I have not anticipated.
Currently, I am still thinking of working a year or two. However, I might pull the trigger earlier, if work becomes more tough for some reason…
I think you need to work continuously with that type of income and your current net worth. Your ratio of net worth to income is low. My recommendation is to get your net worth equal to about 10 times your average income before you should consider taking it down.
You could get to a $10 million net worth in five years.
What is it that you do?
See: https://www.financialsamurai.com/minimum-investment-threshold-amount-work-optional/
https://www.financialsamurai.com/net-worth-targets-by-age-income-work-experience/
Thank you for your answer Sam. I appreciate your perspectives. Small correction to my net worth numbers – they are Euros instead of dollars. However, I agree, my net worth is low, compared to my current income. It took me more than a decade to get to the position where I am now, and taxation in EU can also be brutal. The good thing is, that the living costs here are much lower than for example in SF. Also, i have rather modest lifestyle compared to my income.
My compensation is heavily stock based, so if the market evolves well, 10M net worth is possible within 5 years. However, if my company’s stock does not perform, the story will be different. My own mental goal has been 5M investable assets before pulling the trigger. Let’s see how things unfold
You’ll have a high chance of getting to $5 million in just two years. 45 is a reasonable age to do something new.
With a wife and two young kiddos, it’s a tough situation to be away from them so much. By the time you reach your money goals, they may just want to hang out with their friends. This is the conundrum I thought about a lot, even though my situation is different.
Becuse of the kids, I don’t see myself working 5 more years in the current role. Like your post says, retiring early is more important than retiring rich. Two more years seems quite reasonable, after which I might still do some work, but the money and the hours will be very different.
Sorry, i missed your question. I work in one of the big tech companies.
This is a very interesting perspective that I had never thought of before- your net wealth should be at least 10 times your income before retirement (aside from any other factors that determine the wealth required to retire). Since retiring, I have been offered a few roles all of which I declined. So with this line-of-thought, it would be worth working again if the salary offered was 10% or more of my net worth. Well, that means I won’t be accepting any roles, given my last drawn salary is now 5.3% of my net worth. So I can stop debating whether it is worth accepting any of these offers and just stay happily retired. Great. :)
Yes! If your net worth is equal to 20X your average annual salary, then you are financially free! You don’t need to work more at all. But if you enjoy your job, then keep working. But I would spend more and live it up more.
Larry, I pulled the ripcord at 44 but I have no kids, and my wife retained her well paying job. I was in a business position that I simply could no longer tolerate (full burnout), and I could sell my business and cash out, so I had to make a move. Now we are both about to turn 50, and for us the time has come to wrap it up in full. I would say looking back that 44 was VERY young and your ability to earn big numbers really seems to peak in your late 40’s to early 50’s. You are 100% correct that once you leave this job it will not be replaceable (without extreme luck), so keep it, save everything you can, and by 50 you will be good to go with ease and an even higher quality of life. Just don’t forget to actually do it at 50 and don’t add new excuses to keep working. What struck me the most about early retirement was that none of your friends will be able to retire with you any time soon. So when you are 44yo and out and about enjoying high end meals, high end travel, etc…..be prepared for everyone you meet to be well over 60 years old, because that is your actual “financial peer group”. It’s a little odd, but also still fun. Sam is also correct, your assets to income ratio is way to low IMO, $7.5 – $10 is where yo want to be, it will happen faster than you think.
Wise advice on your friends not being able to hang out during your free time. Funny enough, one of my best friends is 67 years old and someone who I go watch tennis tournaments with all the time. Because he retired at 52, he has kept in shape and has been able to be very active in retirement.
The earlier one retires from a sing job that keeps them seated for too many hours a day, potentially the healthier one will be in older age.
Thanks for sharing. I have been pomdering that I might struggle after retiring. I do have an interesting job and I get many inspiring contacts every day at work. I would really love to spend more time with my family, but ignoring the meaningful contacts at work would be a mistake. I do a lot of sports and i have some goals in mind to go after when i retire, but am afraid that i might still get bored.
My plan is to semi-retire at 60. I have another 9 years to go, but if I can get my brokerage account to $3M sooner then I’ll likely retire early and use my SBLOC (Securities Backed Line of Credit) to buy, borrow, die my way into a healthy retirement – tax free. Never cash out my stock, never pay taxes on the loan, never make payments on the loan til I die.
I’ll then just take the required minimum out of my SEP IRA account and SSN when the time comes around. But I have calculated I can safely live off of the SBLOC for 20 years at an annual loan amount of $120k based on $3M account value.
I think your readers would be interested in learning more about the buy, borrow, die strategy
Sorry, but if it’s what im thinking sounds terrible
This is what multi-millionaires and billionaires use to avoid paying taxes instead of making realized gains. Jeff Bezos, Elon Musk, etc all do this and it’s perfectly legal to do so.
There are a ton of youtube videos to explain this. Or talk to your broker. I was at Charles Schwab last week and my broker told me a large chunk of their wealthy clients are using this strategy
Why is it a terrible idea? If your investments are doing well, then maybe it might be worthwhile to borrow money against your stocks, instead of selling and paying taxes on it. I did a quick calculation on chatgpt and letting your money grow at 7-10% per year might be worth it over 5-8 years.
Can you explain what a SBLOC is? We use Charles Schwab as our investment advisors.
Here: https://www.financialsamurai.com/security-backed-line-of-credit-sbloc/
You can Google anything and add Financial Samurai and you will probably find something.
Would be interested in good resources to learn more about this strategy.
Sam, long time reader. Loved your book. Can’t wait for the new one..
I am 42, wife is 41. Collectively we make around $300k (180k me/120k her). I am totally checked out at work. Been “quiet quitting” (is that still the term being used?) for a while now, kind of hoping to get a severance and figuring out what is next..
+/- market volatility, we have roughly $1.85M across our 401ks, savings, brokerage, HSA, 529 accounts.. our (paid off) condo is worth slightly over $900k (we live in a relatively “affordable” pocket of Brooklyn..)
Even if the market is relatively flat next year, with our own savings (we save at a pretty high savings rate, given we have no mortgage and live car-free in NYC..), I think we can probably get to north of $2M in “investable assets” next year. If I get a decent severance package – even without the market having any outsized gains – I think we hit the $2M investable asset mark pretty easily (so long as the market doesn’t crash)
My wife doesn’t mind her job, and (lack of layoffs permitting..) has stated she could do it another 5, possibly 10 years. My question is – is this a “cop out” in everyone’s minds? If I left my good paying (soul-sucking) job with a decent severance, in order to work 15-20 hours a week part time just to keep busy, while allowing my wife to be the breadwinner – is that me being selfish??
We do have a 5 y/o.. I am sure many readers here can understand there is no amount of money that will make you completely comfortable/at ease, when you have a child to take care of.. I am not sure there is a magical number that would ever put me at complete ease of “taking a step back”. $3M, $5, ..
It depends on how comfortable you feel with your wife being the breadwinner and what else do you have in mind to do after work is over.
There is a growing movement of men retiring early and Encouraging their wives to still work to help build retirement accounts, receive subsidized, healthcare, and have during the day.
It’s called WiFI.
Ask her wife, whether she should be down with that. Her opinion is the most important.
Why is it a soul sucking job?
Love this post! It’s one of my favorites (and I have been a 8+ year reader!!) I am a 44 yo female (single) and have 2 teenage sons. I have a net worth of approx $1.85 million ($900k in retirement accounts, $350k home equity and $600k in brokerage accounts). I only owe $150k on my home and have and additional $160k saved for children in 529 and brokerage accounts. I work in a very high stress (but high paying) job. I need a change but worry I will never be able to retire due to cost of health insurance and also being solely responsible for my children’s expenses. Would love to get your thoughts.
Hi Liz,
Glad you enjoyed it! If you retire early, based on your net worth, you should be eligible for a lot of healthcare subsidies under the ACA. Read this! https://www.financialsamurai.com/how-to-qualify-for-healthcare-subsidies-under-the-affordable-care-act-even-as-a-multi-millionaire/
I’d retire before 50 and focus on paying off your home beforehand. It’ll feel good.
Can you work less hard and see where it takes you? We often have this notion that we have to take on a certain level of work and stress to “deserve” what we are getting paid. In reality, if you are making say $400k a year working 60 hours a week, if you just dialed back to 40 hours, then nobody may notice but you and your lifestyle may improve. I wouldn’t just assume you have to give up your job to improve your life.
I believe there was a study at Boeing a decade or so ago, that employees who retired at 55 on average lived to age 83. Those that retired at 65 lived an average of 18 months. This based on paying out pensions. Having been in the aviation business I can assure the stress was extreme and the sedentary cubical lifestyle lead to chronic health issues that built with age. I remember a few fellow employees literally dying at their desk of strokes and heart attacks. So I concurred with the Boeing study and took the initiative and did retire early. It took 3 years, but now my blood pressure is normal and I’m in excellent health. Lost my old identity and social importance which was hard, but I gained knowledge of who I really am and I’ve grown and experienced tremendously having retired. In a lot of ways I reconnected with my inner child long lost and now embrace curiosity, learning and discovery and lost a lot of social fear of losing my job for being myself! I’m now very happy…content..grateful. I am a time billionaire! As far as money rich.not fully there…but getting there even though retired early..as with most who retire early I heavily invest and I invest aggressively. If the Boeing study is correct…then there is at least the potential to live an additional 15 years of high quality active life retiring early And if you make a 4.5 percent return on investment (after taking some for present income), you would double your assets in that time. The point is…you can have your cake and eat it too. Retiring early allows you to have the longest highest quality of life possible while allowing you time to accumulate the highest amount of assets should you want to pass on a legacy. I should literally have made twice as much assets in my life retiring early then staying 10 more years! :-)
“I am a time billionaire!”…..NICE! This line is pure gold.
A billion seconds is roughly 32 years. That is the time I have for retiring early! A literal time billionaire! Had I stayed I would be money rich but time poor. Most people cannot see the value of time..until it’s too late. They will work to get that second house or that extra high level of retirement income or income security..that they will have little time to enjoy. I chose time rich..money rich can come with time! No regrets! What’s the point of being rich with no time to enjoy it?
“Most people cannot see the value of time..until it’s too late”
Yes indeed. The funny thing is, if you play competitive sports, you are much more sensitive to your body’s decline. It’s those who don’t regularly compete who can be easily fooled until they wake up one day and realize they can’t do the things they used to do, but their minds are still relatively sharp.
I worked at UPS for almost a decade and saw that something similar was happening with many employees. Long-time employees were retiring rich and then dying within five years. We used to joke about it and almost had a death pool.
I appreciate the perspective, I wonder how much the age of your children factors in to your choices and feelings? My husband and I have a 7 and 4 year old, we both make 6 figure salaries, and have a current net worth of $1.5 mil with ~$500k left to pay on our mortgage. He retires in one year from the military and will immediately receive a pension of ~$60k that will pace inflation guaranteed for the rest of his life. He’ll be 40 and I’ll be 36. We’ve been saving ~30% of our income since 2016, but have enjoyed lifestyle creep mostly in the form of travel and eating. We don’t live far from your neck of the woods in Nor Cal.
Is 5 more years to ensure we hit $2.5 mil before FIRE the right choice? Do we retire him fully to soften the workload with the kid hustle and bustle and keep me working another 5-10 years? Or do we make more radical lifestyle changes and both FIRE next year with what we’ve got and enjoy the time with the kids while they’re young? (we both work in the defense industry, going back to work after a break of 5+ years poses some challenges)
I realize much of this is a thought experiment as much as it is a mathematical one. Appreciate all insight!
40 is still very young to retire. Working another 5 years is easy and recommended IMO. But not after 10 years.
Another thing is, when you KNOW there’s a deadline, work becomes much more bearable and you’ll also plan accordingly to put yourself in an even better position as a result.
“The difference in net worth between working for another 20 years versus not working is $3.5 million ($6.7 million – $3.2 million). Now ask yourself: is it worth spending 40,000 more hours working for an extra $3.5 million if you have all your basic needs met?”
Is this correct? Are you assuming that the first person finds some other side hustle to pay for their daily bills? Otherwise, the returns on their $1m of assets would be used for living, so net worth would not reach $3.2m.
Excellent point. That’s true with such an assumption.
But it’s also true in my assumption for the example. Let’s assume the 6% rate of return is after a 4% withdrawal rate. Or we can assume the early retiree living off of side hustle money that keeps them busy. I don’t know an early retiree that does nothing actually. So I’ll clarify in the post! Thanks
I think this is probably the best article you have ever written. It should be compulsory reading for anyone over 40, and be compulsory to read it again every year after that if you are not retired. The message within it is just so incredibly important and profound.
It deeply saddens me when I see so many who are quite literally are wasting their life in the pursuit of money in a stressful job they don’t enjoy, while losing their time and their relative-youth.
While everyone faces different circumstances it is my view that there is a sweet spot. An amount of money that is obtainable with discipline and hard work that is also an amount that allows you to enjoy a good middle to upper middle class lifestyle. Beyond that additional money continues to have a less and less utility. My opinion is the sweet spot is in the $4m to $6m range.
For myself, I retired from a highly stressful career in banking, that I no longer enjoyed, at 53. I am now 59, and it was the best decision of my life without any doubt. My current wealth is within the sweet-spot, but is actually continuing to grow at greater than the inflation rate – which is pleasing as I am also a believer in generational wealth and have 2 daughters to consider in that regard.
I am free and live the ultimate life. In the last year we have spent a month in New Zealand, a month in Australia, 2 months in Japan, a month in China, 2 months in Europe and the balance floating around in Thailand. While we do not fly private and are not in the 1% we lead an amazing life, and that does include flying business almost all of the time. Would it have been worth it to spend another 3 to 5 years on the grind to have even more money we really no longer needed as compared to the life we have had for the last 6 years? Stupid question. The answer is so incredibly obvious. The sad thing is the number of ex-colleagues who cannot see the obvious – but will probably see it when it is too late, and then realize that no matter how much money they end up with, they cannot buy back any time.
Keep up the good work. And may this article be circulated far and wide. It needs to be “shouted from the roof tops” the world over.
Thank you for reading and sharing my work.
“ The sad thing is the number of ex-colleagues who cannot see the obvious – but will probably see it when it is too late, and then realize that no matter how much money they end up with, they cannot buy back any time.”
Sadly, this is true. It’s a result of a strong desire for identity and status in society, as well as the fear of letting go.
Hi Mark – thank you for sharing your insight on the amount for early retirement sweet spot. I found this article super interesting and your insight amazingly helpful. Sam – thank you for this blog. I am a big fan.
Many of us near or at the sweet spot continues to grind with our 9-6 job because we are savers and accustom to accumulate wealth.
Tech worker for a very stressful wall st. bank. age 46 with two kids age 4 and 6. I am looking to achieve the sweet spot within 2-3 years and follow your and Sam’s advice.
No problem! 2-3 years will go by in a hurry. Use that time to challenge yourself to save and invest as much as possible. Then, if you can negotiate a severance, which many can at a Wall St. bank, you could be set up for another 1-2 years of living expenses.
The thing is, once your kids are in school full-time, there is a big void to fill. So it’s good to figure out what you want to do before you leave.
Best of luck!
And therein lies another key problem. Yes, the vast majority who have achieved the sweet spot have been disciplined saver’s who wish to grow wealth. And it is super-hard to break that habit and stop. BUT that is what you MUST do – otherwise it is all for what? And hopefully u will find things can turn out as they are for me – which is the annual growth in my wealth today is around what it was ~5 years before I retired. So now I have everything. I am free. AND I am still growing my wealth. Of course it would grow faster if I had a job. It would grow faster still if I took on 2 jobs. And faster again if I took on a side-hustle. But working 2 jobs and a side-hustle would leave no time to enjoy it anyway. By your mid 50’s the optimum number of jobs and side-hustles is zero !
What are your thoughts on Emerson’s quote that “The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.” Especially for people in education or health care, retiring may not make the best use of decades of hard-won skills.
Retiring early doesn’t mean you do nothing or give up your career. Those skills can continue to be used, whether getting paid for it or not, but more you are doing it on your terms, not because you have to to pay bills. I think the core of the FIRE movement is to have freedom, not stop “working”.
the people who have the ability to retire early are typically not educators or in healthcare (maybe docs?). Typically they are in the corporate world and why Sam alluded to some roles (e.g. a social media company)
One thing that I struggle with – is that one more year of earnings for me is a significant amount of money that can be past down to my kids. I believe they will have it harder than me – even through they are better educated, better morals, and better work ethic than what I had.
So I wonder if working 5 more years is worth effectively setting each of my 3 kids up for life, above and beyond what I have already accumulated and hope to spend aggressively.
It’s a good question, but it’s missing several variables. How much is your current net worth, how old are you and the kids, and how much are you making?
I agree with you that our kids will probably not be as well as we are given the hyper competition and the much higher cost of everything there will have to deal with in the future.
Working for an extra five years is nothing to set your kids up for life. But if you could share some of those variables, that would be helpful.
8 figure NW
3 kids – 2 in college and one about to be
Crooked 7 figure income
Thanks. How much do you enjoy or hate your job? Five years is not that long. But also, how old are you? Unless you’re over 60, I would continue to grind, especially if you are saving baby pandas from extinction.
50. Maybe pandas are my 2nd act?!
Also depends on where you live, right? In a high cost of living city like San Francisco, $10M for 3 kids at age 45 might not be enough. But almost anywhere else, you seem to have more than enough to live a good life.
NY so high cost. Kids are almost done, boy are they expensive. It’s more what legacy I can leave….
I know we are talking about too extremes here, retire rich or retire early, which doesn’t seem to speak to very many people when it comes to retiring early. I just read an article that showed retirement data in the US from 2016 to 2022. Those retirement %s by age are:
40-44, 1%
45-49, 2%
50-54, 6%
55-59, 11%
For the vast majority of Americans, retiring early seems to be a far reach. For those who plan well, delay gratification, and catch a few breaks along the way, it is possible, but the odds are not in most people’s favor.
When it comes to FIRE, I encourage my 26 yo daughter to focus on the FI and worry less about the RE. Those 2 points will intersect at some point if you do the right things. To me, whatever age that turns out to be is not as important as simply reaching whatever age that is.
Definitely two extremes wrt retirement planning.
I wonder which is more feasible? I’m thinking retiring early and cutting expenses to barebones if necessary. But with enough time and good savings and investing, retiring rich is also possible.
What do you and others think?
My intersection point was 57. Not super early but at a point of reasonably assured financial independence throughout retirement. In our situation, where both spouses had good incomes for 30+ years, only 1 child, and no real debt other than mortgage along the way, and then the benefit of (2) pensions, maxed out SS, and multiple well funded 401Ks, after tax savings, and deferred compensation plans, generating a solid NW and good passive income to boot, did not seem that hard. The trick was both of us staying employed and surviving corporate layoffs long enough to get to this point.
Cool. How early of an age do you think you both could have retired if really pushed? Anything you would different from 45+ onwards?
I’m 47, so I’m looking for as much guidance and perspective as possible over the next 5 to 10 years. I feel like my life is going crazy quit now and it’s kind of concerning.
I made a promise after I bought my latest house in October 2023 to grind it out until end of 2027, so by age 50.
With some different decisions and changes, I believe I could have easily shortened that by 7-10 years. For example, we bought a much bigger house than we needed 20 years ago. If I had bought a home with half the mortgage required, and invested the other half over that 20 year period, I would have had quite a bit more money.
I’ve made some investing decisions that were not as sound as they could have been. I got caught up in the idea of diversification and over-diversified into some areas that hurt my rates of return. I should have kept things much more simple and I would have been much better off. I took on more risk than I needed to, and the returns were less than they could have been.
I got a late start on increasing passive income. I could have covered future expenses much sooner had I planned better in this area.
I spent a lot more on “stuff” than we needed to. I could have reduced expenses significantly and invested those savings to increase net worth and passive income.
I chased some alternative investments that didn’t pan out. That was another self-inflicted wound that could have been avoided.
I could have done a better job managing my career and increasing my opportunities for more promotions into better paying jobs. I could have been smarter about developing my internal network and playing the corporate game a lot better than I did. Some of my peers succeeded in doing this, and are fabulously wealthy today. They were not more skilled than me at doing their jobs, but they played the politics much better than I did.
Just paying closer attention to some of these would have reduced the number of years I needed to work, but hindsight is always 20/20. I’m still grateful and blessed even through all the mistakes. Fortunately, enough things went right to be where we are.
A slightly different take: I’m a recently retired physician and my wife a recently retired dentist. I’m early 70s, wife 60s. We both profoundly miss our practices. Taking care of patients, people who put their trust in you, curing when you can, comforting always, and the gratitude of 95%+ of those we treated, well there is nothing like it. Perhaps it’s generational or the puritan work ethic or the American way (at least as it was when we were growing up) but hard work and contributing to society were values that were instilled in us. It seems that many of the younger generations are all about me, me, me, posting about their vacations and possessions and frankly don’t seem to give a damn about their country or fellow citizens. Since I’m on a rant this whole FIRE movement seems wrong. Those of you who can achieve it are our best and brightest. You all have the education, the brains, the drive, and the wherewithal to better this nation but with FIRE you’re dropping out to seemingly lie on the beach and have drinks with paper umbrellas in them. What is the value in that? What is your purpose?
Nicely framed!
I recently FIRE’d at age 47 after practicing medicine for 20 years. I don’t view my decision as as selfish act, not caring about others and unwilling to continue to contribute to society. I have accumulated enough wealth so that my family and I can live in comfort without much in the way of financial stress. I don’t feel the need to continue to work for another 20 years to horde more wealth than I require to live a happy life with those I love. By retiring early and being a stay at home father, I have the privilege to be very present for my young children as they grow. I get tremendous joy and satisfaction by being there each morning to make them breakfast and walk them to the school bus and then be there when they return home in the afternoon to help them with their homework or practice sports. Another benefit to FIRE, is that by leaving the workforce early, I am creating an opportunity for the new generation of medical providers to join the practice I left and the cycle continues without stagnating. TLDR: To each their own.
I agree with CMAC. I am not at FIRE but now work part-time as a consultant. I am still contributing to society through my work, but also have much more time to spend with my kids. Not only that, I now have the bandwidth to volunteer for causes in my community that are important to me: just this week I have volunteered at my kids’ public school, canvassed my neighborhood to get out the vote, and helped an elderly neighbor as he navigates downsizing after the passing of a family member. Sure, many who retire early will publicly brag about their lavish livestyles, but many of us will use the extra time to give back to society in different ways than they did before.
As much as I also shake my head at young folks incessantly posting consumerist excesses on social media, lumping the FIRE movement in with that relatively small group makes about as much sense as implying it’s unAmerican to retire when you want to instead of a certain age. I hear versions of this perspective frequently and I think it sounds more errantly rightous than sensible.
Congrats to both you and your wife for accumulating wealth while doing something you loved, then quitting when you wanted to! That sounds pretty FIRE to me. There are many American older than you who don’t have enough money to retire or stay retired. I’d suggest nobody is a superior American or human for retiring from their primary profession at a later age than someone else.
I agree with your note that successful FIRE people tend to have a good dose of education, brains and drive. Thank goodness retirement doesn’t come with a lobotomy! Those talented folks stay smart and driven and, in my experience (I know lots of them), simply diversify their awesomeness and value creation after they have enough money to do whatever they want. Go FIRE (and all related acronyms)!
I came to realize that my utility to the sector I was working in was already diminished by the time I decided to retire early. What’s the point grinding hard just to maintain a position in a corporate where you keep doing more but same kind of work with no advancement ? If you can advance, very well. Keep working. But not everybody can. But either way there is an immense amount of stress. Also looking back, I question the need for certain work I did and some decision were not entirely taken for any great cause. But rather as an act by some executive to show off in his annual appraisal. I kind of felt that the whole thing was a big game rather than service to society.
Hey Sam – I agree that the gap between retiring rich and retiring early is at least 10 years – ever think about building a financial formula around this like you’ve done other times?
Sam, when you say you can retire when passive income meets expenses, does passive include a withdrawal rate, or it has to be all income streams (rental, dividends, etc.)
Good question for clarification. I have always assumed passive income from Investments to pay for expenses, which doesn’t touch principal. But as you get older, you can definitely draw down principal if you feel like you will die with too much. It’s up to the individual.
I am interested in whether the audience here actually plans on an 80-odd year lifespan? I think many of us have a solid shot at 100. I am planning on it. If you are healthy at 50, maintain a reasonable lifestyle, and avoid a mortal black-swan event (more usual than not), then a lifespan over 80 is pretty easy nowadays. And if you have resources beyond those required to “cover your basic needs”, it is not unrealistic that you can extend your life even further by buying the medical care, procedures, or interventions that advancing science and AI will likely provide in coming decades.
With this possibility in mind, it might be cool to work longer to build assets, and stay alive long enough to see just how screwed future generations will be by global warming. :) Think it won’t happen before 2100? Take a look at feedback loops, the most recent planetary health check, and ocean acidification rates. It’s pretty fun if you are a horror fan.
Full disclosure, I run my business and have significant freedom while doing so. I am not involved in anybody’s rat race, so early retirement does not feel as pressing to me as it could to others. I can certainly see how working for wages would change the calculus.
P.S. “Hence why” is still linguistically incorrect, no matter how many times people use it. One or the other is all you need, if anyone cares.
Yes plan to live a “potentially” long life but definitely don’t stop living in the moment. Too many people think they’re going to live to be 80 only to be cut down too soon in their 50s and 60s. Choose a savings rate and spend the rest on making your life happy.
I argue the financial samurai is not retired.
I agree with you, hence why I wrote “pseudo retired” in the intro. These posts and books don’t write themselves.
Feel free to make your arguments as to why I’m not retired.
Here’s a post you might enjoy: 10+ Years Of Fake Retirement Later: Here Are The Most Important Takeaways